Over-valued fossil fuel assets creating trillion-dollar bubble about to burst:
A major new report has warned that conventional energy assets including coal, gas, nuclear and hydro power plants have been consistently and "severely" over-valued, creating a massive bubble that could exceed $US1 trillion by 2030.
The report is the latest from Rethinx, an independent think-tank that was co-founded by Stanford University futurist Tony Seba, who is regarded as one of few global analysts to correctly forecast the plunging cost of solar over the last decade.
According to the new report, co-authored by Rethinx research fellow Adam Dorr, analysts and the broader market are still getting energy valuation badly wrong, not just on the falling costs of solar, wind and batteries, or "SWB," but on the true value, or levelised cost of energy, of conventional energy assets.
"Since 2010, conventional LCOE[*] analyses have consistently overestimated future cash flows from coal, gas, nuclear, and hydro power assets by ignoring the impacts of SWB disruption and assuming a high and constant capacity factor," the report says.
Where the analysts are going wrong, according to Seba and co, is in their assumptions that conventional energy plants will be able to successfully sell the same quantity of electricity each year from today through to 2040 and beyond.
[...] This assumption, says the report, has been false for at least 10 years. Rather, the productivity of conventional power plants will continue to decrease as competitive pressure from near-zero marginal cost solar PV, onshore wind, and battery storage continue to grow exponentially worldwide.
"Mainstream LCOE analyses thus artificially understate the cost of electricity of prospective coal, gas, nuclear, and hydro power plants based on false assumptions about their potential to continue selling a fixed and high percentage of their electricity output in the decades ahead," the report says.
[...] "In doing so, they have inflated the value of those cash flows and reported far lower LCOE than is actually justified ... and helped create a bubble in conventional energy assets worldwide that could exceed $1 trillion by 2030."
[*] LCOE: Levelized Cost Of Energy.
(Score: 0) by Anonymous Coward on Saturday March 20 2021, @11:19PM (9 children)
Ah, non-market intervention, iirc, it's already hit Germany.
If California, yes, another mess is to be expected, particularly if it's during summer and A/C shuts off in SoCal. But that's not so likely, since solar is best when sunny. If Vermont, much less of a problem because of the many houses heated by wood--they can go without power for a good while (and, at least for now, A/C isn't a necessity in VT).
(Score: 1, Informative) by Anonymous Coward on Saturday March 20 2021, @11:28PM (4 children)
Replying to myself. I was wrong about VT on two counts -- https://www.eia.gov/state/?sid=VT [eia.gov]
tl;dr -- VT is well on it's way--wood isn't primary and they have already done their renewable homework.
(Score: 2) by legont on Sunday March 21 2021, @01:03AM (3 children)
Hydro is not renewable because reservoirs silt.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 2) by hendrikboom on Sunday March 21 2021, @02:30AM (1 child)
It is possible to dredge them. But no one seems to be doing it.
(Score: 3, Touché) by legont on Sunday March 21 2021, @10:53AM
I was told that it is prohibitive energy wise. Unless we use nukes to dig which was planned and tested at some point.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 2) by FatPhil on Sunday March 21 2021, @11:17AM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2, Interesting) by legont on Sunday March 21 2021, @01:14AM (3 children)
No fear. Russians are building nuclear power right on the German's border.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 1, Insightful) by Anonymous Coward on Sunday March 21 2021, @04:56AM (2 children)
And Nevada and/or Arizona will do the same on the California border. Or maybe they already have? Didn't check.
(Score: 2) by FatPhil on Sunday March 21 2021, @11:22AM (1 child)
Handy hint, legont, look at a map before spouting nonsense on the internet.
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 1) by khallow on Sunday March 21 2021, @03:41PM